Azerbaijan, Baku, Jan. 28 / Trend U.Ismayilova /
Prices for primary housing market of Baku in 2010 fell by 0.7 percent and 1.6 percent in December, the NGO Participants of Property Market reported.
"Prices in the fourth quarter of last year fell by 1.9 percent compared to the previous year," the organization reported.
As a result of the customer base deficit, 80 percent of construction companies began to offer their buildings to the loan.
The foundation of 26 buildings was laid in Baku in 2010. Five new construction companies entered the market and the total number increased to155, which is more by 19 companies, or 36.8 percent than in 2009.
Increase in the number of construction companies shows renewed interest in the real estate market, both by private entrepreneurs and foreign investors.
Today, the construction of residential complexes increased in the capital. Decrease of floors in new buildings from 12 to seven or less is observed in the market due to the administrative interference of the government, as well as the market demand.
According to research, activity in the primary market of Baku is still below average and the main reasons for this are:
- Shortage of buyers as a result of excess supply over actual demand;
- Preference for acquisition of housing outside the city because of high prices in the city center;
- Inconsistency of new buildings (due to lack of necessary documents) and the conditions for obtaining a mortgage; and
- Decrease in trust in new buildings because of communal issues and problems in the documentation.
Because of the situation, only nine new buildings in Baku were sold during 2010. Currently, 80 percent of buildings under construction in Baku have problems with the sale of apartments on the upper floors, which prevents their exit from the market
Given the investment stability and ample financial capacity of some companies, it is possible to predict the dynamic development of the market in 2011, the organization said. Foreign investors' interest in the Azerbaijani market of primary residence also should be noted.